To taxpayers who have faithfully filed tax returns for years, it may be surprising to find that they may not have to file. Generally, you do not need to file a tax return if your income is under these amounts:

Filing Status	Federal		Arizona resident
	Under age 65	65 or older	Under 65	No tax*
Single	$8,750	$10,050	$5,500	$6,347
Head of Household	$11,250	$12,550	$5,500	$12,894
Married filing jointly	$17,500	$20,100	$11,000	$12,694
Married filing separately	$0	$0	$5,500	$6,347
Widow(er) with qualifying dependent	$17,500	$18,800	--	--

However... you must file a return if you had self-employment income of $400 or more.

Or, you should file if someone else (like your parents) could claim you as a dependent and you earned over $800 or had investment income (interest on savings, stock dividends, etc.) of more than $250.

Also, you should file a return even if your income is under these limits if you:

• Had withholding on wages, pensions, retirement distributions or investment accounts.
• Are eligible for an earned income credit.

You may be required to file a state return even if you don't have to file a federal one. There are other circumstances where you might be required to file, or it might be beneficial to file, so check with an Enrolled Agent to be sure.

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Personal exemptions

Personal exemptions for 2008 are $3,500 per person ($3,650 in 2009). You are entitled to claim one exemption apiece for yourself, your spouse if married, and each dependent you can claim. If someone else (such as your parent) claims you as a dependent, you cannot take an exemption for yourself.

In Arizona, personal exemptions are figured differently. A single person or a married person filing separately gets a personal exemption of $2,100. A married couple filing jointly or a single head of household has a personal exemption of $4,200. Dependent exemptions are $2,300 per person.

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Standard deductions

The IRS excludes from your taxable income a specified amount of expenses, called a "standard deduction." If your actual expenses in the allowed categories total more than the standard deduction amount, you may deduct those actual expenses, which is called "itemizing." If your itemized deductions are less than the standard amount, you are better off to use the standard deduction.

2008 Filing Status	Federal	Over 65	Arizona #
Single	$5,450	$6,750	$TBA
Head of Household	$8,000	$9,300	$TBA
Married filing jointly	$10,900	$13,500	$TBA
Married filing separately	$5,450*	$6,750*	$TBA
Widow(er) with qualifying dependent	$10,700	$12,000	--

# AZ has not released annual adjustments yet

2009 Filing Status	Federal	Over 65	Arizona
Single	$5,700	$7,050	$4,373
Head of Household	$8,350	$9,700	$8,745
Married filing jointly	$11,400	$13,500	$8,745
Married filing separately	$5,700*	$6,750*	$4,373
Widow(er) with qualifying dependent	$11,400	$12,750	--

* Only if spouse does not itemize; otherwise $0

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Tax brackets

2008 Federal Tax bracket	Single	HOH	MFJ or QW	MFS
	For income over...
10%	$0	$0	$0	$0
15%	$8,025	$11,450	$16,050	$8,025
25%	$32,550	$43,650	$65,100	$32,550
28%	$78,850	$112,650	$131,450	$65,725
33%	$164,550	$182,400	$200,300	$100,150
35%	$357,700	$357,700	$357,700	$178,850

The federal Form 1040 actually collects several other taxes including:

• Self employment (Social Security and Medicare) tax
• Social Security and Medicare tax on tip income
• Early withdrawal tax on IRA's and retirement plans
• Household employee payroll tax ("nanny tax")
• Alternative minimum tax

2009 Federal Tax bracket	Single	HOH	MFJ or QW	MFS
	For income over...
10%	$0	$0	$0	$0
15%	$8,350	$11,950	$16,700	$8,350
25%	$33,950	$45,500	$67,900	$33,950
28%	$82,250	$117,450	$137,050	$68,525
33%	$171,550	$190,200	$208,850	$104,425
35%	$372,950	$372,950	$372,950	$186,475

Arizona tax brackets:


The Arizona legislature passed a temporary tax reduction for 2006 and 2007. In 2008, tax rates will revert to their 2005 figures.


Arizona		Tax bracket
Status	Income over	2006	2007	2008
Single or MFS	$0	2.73%	2.59%	2.87%
	$10,000	3.04%	2.88%	3.20%
	$25,000	3.55%	3.36%	3.74%
	$50,000	4.48%	4.25%	4.72%
	$150,000	4.79%	4.54%	5.04%
MFJ or HOH	$0	2.73%	2.59%	2.87%
	$20,000	3.04%	2.88%	3.2%
	$50,000	3.55%	3.36%	3.74%
	$100,000	4.48%	4.25%	4.72%
	$300,000	4.79%	4.54%	5.04%

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Mileage rates

Standard mileage rates may be used as an alternative to deducting actual expenses. The standard mileage rate must be claimed the first year a vehicle is used for deductible purposes; you cannot change to it once you have started claiming actual expenses. To deduct either mileage or actual expenses, you must have a written record for each trip showing:

Retirement plan limits

Taxpayers age 50 and older may contribute a higher amount to retirement plans to "catch up," regardless of whether or they had contributed the maximum amounts earlier in life.

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Estate and gift tax exemption

Your estate will have to pay taxes if its net value when you die is more than the "exempt" amount set by Congress. The exemption amount is reduced by any gifts throughout the lifetime of more than the annual gift tax exclusion limit. The gift exclusion is per donor and per recipient, so a married couple can exlcude gifts up to double the amount shown in the chart to a child, for instance. Making a gift of more than the annual exclusion does not trigger immediate taxes, only the need to file a gift tax Form 709.

*TBA: To be announced; IRS has not yet released this figure

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